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ARGU MENTS 

OT  THE 

NEW  YORK 


heap  |f  ransjwtaiioti  J^sso^ialion, 


IK  FAVOR  Or 


Senate  Bill  No. 


Providing  a  Board  of  Railway  Commissioners  for  this  State 


MADE  BEFORE  THE 


COMMITTEE  ON  RAILWAYS,  OF  THE  SENATE, 


MARCH  28,  1876. 


SEYMOUR  DURST 


THE  NEW  YOKE 
Office  :  110  PEARL  STREET, 

( Hanover  Square.) 


OFFICERS: 
BENJAMIN  P.  BAKER,  President. 

H.  B.  CLAFEIN,  ) 
JOHN  F.  HENRY,        }  Vice  Presidents 
FRANKLIN  EDSON,  ) 

F.  B.  THURRER,  Secretary.  E.  R,  DURKEE,  Treasurer. 

THEO.  F.  LEES,  General  Agent 


DIRECTORS: 


IL  B.  CLAFLLN, 

B.  G.  AUNOLD, 

GEO.  A.  MERWIN, 

W.  S.  FAIRFLELD, 

A.  B.  MILLER, 

H.  K.  MILLER, 

FRANKLIN  EDSON, 

B.  P.  BAKER, 

CHAS.  WATROUS, 

WM.  DURYEA, 

J.  SPENCER  TURNER, 

F.  B.  THURBER, 

F.  A.  SCHROEDER, 

D.  C.  BOBBINS, 

W.  H.  HURLBUT, 

HARVEY  FARRINGTON, 

E.  R,  DURKEE, 

JOHN  F.  HENRY, 

JOHN  DWIGHT, 

W.  I.  PRESTON, 

W.  H.  WILEY, 

BENJ.  LICHTENSTEIN, 

GEORGE  BROWN,. 

JAS.  S.  BARRON, 

JAMES  PYLE, 

MAYER  LEHMAN, 

E.  F.  BROWNLNG, 

JORDAN  L.  MOTT, 

THEO.  F.  LEES, 

W.  F.  KIDDER, 

J.  P.  ROBINSON, 

W.  F.  CONKLING, 

B.  L.  ACKERMAN, 

DARWIN  R.  JAMES, 

SIMON  STERNE, 

THEO.  E.  ALLEN. 

4  t  **  1 


AVBRY 
DWRST 


Mr.  Charles  Watrotjs,  Chairman  of  the  Committee  representing  the  New 
York  Cheap  Transportation  Association,  addressed  the  Senate 
Committee  as  follows: 

Mr.  Chairman  and  Gentlemen  of  the  Committee  on  Railroads  : 

We  appear  before  you  to-day  in  behalf  of  a  bill  which  has 
been  introduced  in  the  Senate,  and  referred  to  your  Committee, 
which  provides  for  the  establishment  of  a  Board  of  Railroad  Com- 
missioners in  and  for  the  State  of  New  York.  This  bill  was  pre- 
pared by  the  Committee  on  Legislation  of  the  New  "York  Cheap 
Transportation  Association  ;  is  based  upon  an  act  providing  a  simi- 
lar Board  of  Commissioners  for  the  State  of  Massachusetts,  and  in 
its  preparation  our  Committee  had  the  benefit  of  the  advice  and 
experience  of  Mr.  Charles  Francis  Adams,  Jr.,  who  is  everywhere 
recognized  as  an  authority  upon  questions  of  transportation,  and 
an  exponent  of  fair  and  just  principles  of  action  as  between  rail- 
road companies  and  the  public.  The  Association  which  we  repre- 
sent is  composed  of  business  men  of  the  State  of  New  York,  many 
of  whom  are  stockholders  in  different  lines  of  railway,  and  whose 
only  object  in  advocating  this  measure  is  the  establishment  of  just 
and  proper  relations  between  these  great  semi  public  institutions 
and  the  public.  The  importance  of  this  question  has  been  becom- 
ing more  and  more  apparent  during  the  last  twenty  years  during 
which  time  the  magnitude  of  business  transacted  by  railroads  has 
increased  more  than  fourfold.  As  an  indication  of  the  importance 
of  the  subject  to  the  public,  we  might  state  that  the  amount  paid 
for  transporting  freight  alone  over  the  railroads  for  this  State  dur- 
ing the  year  1874  was  $G5;085,G04,  and  there  is  no  law  now  on  the 
statute  books  regulating  this  immense  tax  upon  commerce,  nor  any 
means  of  knowing  whether  it  is  just  or  unjust.  During  the  same 
period,  the  total  amount  paid  for  moving  property  over  the  canals 
of  this  State,  including  the  tolls,  was  about  one-sixth  of  this  sum  ; 
in  addition  to  the  receipts,  for  freight  charges,  there  was  upward  of 
$25,000,000  derived  from  passenger  traffic,  and  $7,000,000  from 
miscellaneous  sources,  sums  which  are  in  the  aggregate  more  than 
six  times  as  large  as  the  entire  revenues  of  the  State  derived  from 
taxation.  The  proper  regulation  of  this  great  system,  on  a  basis 
which  will  be  just  to  all  concerned,  is  a  difficult  problem  of  political 
economy,  and  one  which  is  continually  becoming  more  intricate  as 


4 


the  system  grows  complex.  The  general  situation  is  briefly  but 
forcibly  stated  in  one  of  the  reports  of  the  Massachusetts  Board  of 
Kail  way  Commissioners,  of  which  Mr.  Adams,  Jr.,  is  Chairman.  It 

says : 

"  More  public  attention  than  ever  before  has,  during  the  last 
year,  been  given  to  the  nature  and  extent  of  the  relations  existing 
between  governments  and  railroad  corporations.  This  has  especially 
been  the  case  in  America,  where  most  unusual  activity,  and  at  times 
an  unnecessary  degree  of  temper,  have  characterized  the  discussion 
and  consequent  political  action,  while  the  burden  of  the  discussion 
has  related  to  the  unsatisfactory  character  of  these  relations.  The 
tendency  of  political  action  has  been  toward  their  close  definition, 
and  the  drawing  of  the  machinery  of  transportation  more  and  more 
within  the  range  of  Government  control.  In  Great  Britain,  the  agi- 
tation has  led  to  the  creation  by  Parliament  of  a  Board  of  Railway 
and  Canal  Commissioners,  which  is  apparently  designed  to  act  as  a 
special  tribunal,  having  cognizance  only  of  certain  questions  arising 
between  railroad  companies  as  among  themselves,  or  between  them 
and  the  communitj^.  In  America,  it  has  resulted  in  prolonged  legis- 
lative debates  and  inquiries,  in  the  passage  of  numerous  laws,  and 
in  certain  States,  of  new  constitutional  provisions.  It  may  be  pre- 
sumed, as  a  result  of  forty  years'  expenditure  of  capital  and  labor, 
the  general  work  of  railroad  construction  is  now  completed,  in  its 
larger  aspects,  or  in  other  words,  the  more  civilized  countries  of  the 
earth  are  supplied  with  improved  highways  sufficient  for  their  im- 
mediate wants,  and  the  question  of  adjustment  has  succeeded  the 
work  of  construction,  and  an  enormous  mass  of  machinery,  social 
and  political,  is  assuming  its  relations  with  the  political  with  which 
it  finds  itself  incorporated,  and  is  necessarily  exercising  a  very  dis- 
turbing influence  upon  them.  The  amount  of  this  disturbance  seems 
closely  proportioned  in  different  communities.  The  railroad  sys- 
tems were  in  the  beginning  established  upon  the  relations  for  an 
even  operation  on  general  economical  laws  alone,  or  upon  govern- 
ment supervision  or  control.  It  would  seem  to  be  much  greater  in 
the  former  case  and  less  in  the  latter.  This  arises  from  the  fact  that 
all  communities  which  sought  to  base  the  regulation  of  their  rail- 
ways upon  the  economical  laws  alone  are  in  some  way,  and  whether 
consciously  or  unconsciously,  trying  to  abandon  that  ground  and  to 
get  upon  some  other.  It  may  now  be  taken  as  generally  conceded, 
that  railroads  are,  and  from  the  very  nature  of  things  must  always 
remain,  practical  monopolies  ;  that  the  operation  of  the  law  of  com- 


5 


petition  as  affecting  supply  and  demand  can  exercise  a  very  limited 
control  over  them,  and  that  this  limited  control  is  rather  of  a  dis- 
turbing than  an  fqualizing  character.  The  supply  of  competing 
railroads  is  not,  and  cannot  be,  indefinite,  nor  does  the  increase  in 
their  number  tend  to  decrease  the  cost  of  transportation  ;  nor  when 
unprofitable  in  one  place  can  they  be  moved  to  another;  nor  can 
any  excess  of  capital  invested  be  realized  at  will  and  otherwise  used. 

"  Nor  can  they  be  made  to  feel  the  influence  of  competition 
equally  at  all  points  which  they  serve.  Competition  is,  however, 
made  up  of  these  very  elements  here  wanting.  It  is  their  presence 
which  supplies  its  effective  regulating  of  fares  to  the  natural  laws  of 
supply  and  demand.  The  popular  mind  has  been  slow  to  realize 
that  they  were  here  wanting  ;  but  once  this  obvious  fact  is  con- 
ceded, it  follows  that  all  the  dealings  of  railroads  with  a  com- 
munity nust  either  be  unregulated  except  by  the  intermittent  ac- 
tion of  the  disturbing  force,  or  else  that  they  must  be  carried  on 
under  a  greater  degree  of  governmental  interference.  Yery  natur- 
ally, therefore,  the  character  and  degree  of  governmental  inter- 
ference are  most  actively  discussed  in  those  countries  which  origin- 
ally organized  their  railroad  systems  on  the  assumption  that  no 
such  interference  was  necessary.  Of  these  countries,  America  was 
that  one  which  carried  its  reliance  upon  economical  laws  the  far- 
thest. It  is  in  America,  consequently,  that  the  work  of  readjust- 
ment is  accompanied  wilh  the  greatest  amount  of  difficulty.  In 
theory,  however,  though  not  in  law,  the  railroad  corporations  of 
America  originally  enjoyed  an  independence  of  government  control 
common  to  all  general  enterprises.  They  were  ordinarily  likened 
to  associations  for  purposes  of  improved  bootmaking  or  other 
manufacturing,  and  left  in  their  operations  to  be  controlled  by  the 
same  economical  laws.  In  practice,  however,  they  have  been  sub- 
ject to  all  sorts  of  legislation  intended  to  regulate  them  in  their  re- 
lations to  the  community.  For  over  forty  years,  the  attempt  on  the 
part  of  legislative  bodies  to  form  statutes  in  the  nature  of  usury 
laws,  which  would  be  of  some  binding  force  when  applied  to  trans- 
portation, has  been  no  less  incessant  than  futile.  As  regards  regu- 
lating fares  and  freights,  for  example,  the  favorite  subject  for  legis- 
lation, the  framing  of  a  practical  railroad  tariff,  one  which  will  even 
fairly  conform  to  local  and  economical  requirements,  is  the  most 
difficult  and  perplexing  task  to  which  railroad  managers  are  called 
upon  to  address  themselves.  Yet,  until  very  recently,  the  idea  has 
been  almost  universal  among  legislators  that  it  required  only  the 


0 


passage  of  some  simple  law  limited  to  a  few  sections,  which  almost 
anyone  could  draw  up  after  an  hour's  consideration,  to  regulate  the 
whole  subject  on  a  wise,  jus!",  cheap  and  permanent  basis.  Accord- 
ingly, the  statute  books  of  all  the  different  States  contain  examples 
of  enactments  passed  in  this  spirit  of  confident  ignorance." 

The  general  result  of  the  investigations  of  the  present  very 
able  Board  of  Railway  Commissioners  for  the  State  of  Massachusetts 
points  to  the  following  conclusions  :  That  the  whole  subject  of 
transportation,  and  the  relation  of  our  modern  highways  to  the 
public  is  one  of  vast  importance,  and  none  the  less  complex  than  it 
is  important  ;  that  it  demands  the  constant  and  careful  study  of  a 
Board  of  Commissioners,  who,  in  order  to  be  useful,  must  be  men  of 
character  and  capacity  ;  that  any  legislation,  to  be  wise  and  benefi- 
cent, must  be  based  upon  the  results  of  such  study  ;  that  in  prac- 
tice, the  very  existence  of  such  a  body  obviates  the  necessity  of  much 
legislation  for  it  acts  as  a  means  of  arbitration  between  the  rail- 
roads and  the  public  in  man}r  matters  which  come  before  them  ; 
that  it  serves  to  focalize,  and  bring  to  bear  public  opinion  upon 
many  of  the  points  involved,  and  defects  and  abuses  are  in  conse- 
quence thus  thoroughly  remedied  which  might  remain  and  be  a 
constant  source  of  irritation  and  bad  feeling.  We  are  of  the  opinion 
that  the  operations  of  such  a  Board  would  prove  beneficent  in  all 
respects,  and  that  once  in  operation,  it  would  be  regarded  with 
great  favor  by  even  railroads  themselves,  for  it  would  act  as  a  safe- 
guard against  the  strikes  to  which  railroads  are  now  constantly  ex- 
posed. This  act  does  not  endow  the  Commissioners  with  any  arbi- 
trary power  to  fix  the  rates  of  freight  as  has  been  done  in  some  of 
the  Western  States.  Its  provisions  are  almost  precisely  similar  to 
the  Massachusetts  law,  the  duties  of  the  Commissioners  being  in 
brief  to  study  the  workings  of  the  transportation  system  of  the  State, 
collect  information,  and  report  to  the  Legislature  the  result  of  their 
labors.  The  present  system  of  supervision,  and  system  of  reports 
made  to  the  State  Engineer  and  Surveyor,  is  little  better  than  no 
system  at  all.  As  an  illustration  of  which,  we  quote  from  a  report 
made  by  the  Sodus  Point  &  Southern  Railroad  to  the  State  En- 
gineer, and  which  appears  on  page  754  of  his  last  annual  report  : 

"  D.  M.  Green,  Esq.,  Deputy  State  Engineer  and  Surveyor : 

"  Sir — The  Sodus  Point  &  Southern  Railroad  Company  passed 
into  the  hands  of  Sylvanus  J,  Macy,  receiver,  on  the  7th  day  of 
June,  1874,  and  prior  to  that  time  the  road  has  been  in  the  hands 
of  Charles  J.  Pusey  for  some  one  and  a-half  years  as  lessee  and  con- 


7 


structor  for  completion  of  the  road.  No  books  or  accounts  were 
found  to  make  a  reliable  report  for  a  whole  fiscal  year.  The  state- 
ments here  presented  cover  the  period  from  June  6th  to  October 
1st,  1874.  The  construction  account  is  made  up  by  adding  the  ex- 
penditures of  the  above  named  period  to  the  amounts  contained  in 
the  report  forwarded  to  State  Engineer  and  Surveyor  for  1873.  The 
undersigned  believe  that  said  amounts  are  largely  in  excess  of  the 
true  amounts  as  contemplated  by  the  statute,  and  for  that  reason 
do  not  vouch  for  the  correctness  of  the  construction  account, 

"  Sylyaxus  J.  Macy,  Receiver. 

"  Henry  Tax  Yleck,  Superintendent." 

Under  a  proper  system  of  supervision  by  a  competent  Board 
of  Railway  Commissioners,  such  a  state  of  things  would  be  impos- 
sible. One  of  the  most  useful  acts  of  the  Massachusetts  Board  of 
Commissioners  has  been  the  codification  of  the  laws  of  thaf,  State 
relating  to  railways.  In  referring  to  the  necessity  of  this  work,  the 
Commissioners  say  "  that  no  one  who  has  had  occasion  to  notice 
the  existing  confusion  of  those  laws  can  doubt  the  expediency  of 
passing,  with  the  least  possible  delay,  some  such  measure  as  that 
submitted.  The  accumulation  of  special  acts  relating  to  railroads 
has  been  such  that  it  is  now  most  difficult  to  ascertain  the  exact 
position  of  corporations  either  toward  each  other  or  toward  the 
State." 

From  an  examination  of  the  general  railroad  law  of  this  State, 
with  the  many  amendments  and  special  laws  which  have  since  been 
made,  we  are  impressed  with  the  force  of  the  foregoing  remarks  as 
applied  to  the  laws  of  our  own  State,  and  of  the  necessity  of  similar 
work  being  performed  here.  Of  the  general  desirability  and  pro- 
priety of  creating  a  Board  of  Railway  Commissioners  such  as  we 
have  indicated  for  this  State,  we  can  only  say  we  simply  call  your 
attention  to  the  fact  that  the  State  exercises  in  the  interest  of  the 
public  a  supervisory  authority  over  insurance  companies,  savings 
banks,  etc.,  and  why  should  it  not  over  our  system  of  transportation? 
a  system  which  derives  its  existence  from  the  people,  is  essentially 
public  in  its  character,  and  the  only  one  which  shares  with  the  State 
the  power  of  taxation,  which  power  is  exercised  to  the  extent  of 
raising  a  revenue,  as  before  mentioned,  six  times  larger  than  that 
of  the  State.  And  finally  a  system  on  which  the  general  welfare  of 
the  State  is  more  dependent  than  any  other  created  by  its  laws. 

We  come  before  you  as  business  men  who  have  no  personal  ends 
to  subserve  nor  any  interest  other  than  that  which  every  producer, 


8 


consumer  and  business  man  has  in  this  subject.  We  do  not  ask 
that  arbitrary  and  unjust  laws  be  enacted  ;  but  we  claim  that  the 
interests  alike  of  stockholders  and  the  public,  demand  that  there 
shall  be  a  careful  study  of  the  relations  which  exist  between  our 
transportation  system  and  the  public,  and  such  regulation  as  will  be 
just  to  all  concerned. 

Mr.  Simon  Sterne  followed  in  support  of  the  Bill,  saying  : 
Mr.  Chairman  and  Gentlemen  of  the  Committee  : 

When  my  friends  of  the  Association  which  I  here  represent 
asked  me  to  go  before  you  and  urge  the  passage  of  the  bill  organ- 
izing a  Railway  Commission  for  the  State  of  New  York,  I  must  confess 
that  I  had  but  little  stomach  for  this  fight  by  reason  of  the  very  slight 
effect  that  my  argument  made  two  years  ago  upon  a  committee  of 
the  Senate,  composed  almost  of  the  same  members  as  the  pres- 
ent one,  had  upon  the  progress  of  the  bill  then  before  it.  That  that 
bill,  similar  to  the  one  now  before  you,  was  not  even  reported 
caused  me  to  feel  how  hopeless  our  task  was,  until  a  public  opinion 
had  been  created  sufficiently  powerful  not  to  be  resisted  in  the 
legislative  halls. 

Senator  Selkreg. — Will  you  kindly  explain  the  provision  of  the 
bill,  and  why  it  is  so  lengthy  a  document  ? 

Mr.  Sterne. — Gladly.  The  bill  organizes  a  Commission  for  the 
State  of  New  York,  at  the  expense  of  the  railways  themselves, 
which  Commission  shall  have  power  to  investigate  the  books  and 
papers  of  all  railway  corporations  in  this  State,  to  examine  into 
their  management,  and  to  report  such  remedial  measures  as  may 
suggest  themselves  to  the  Commissioners  and  report  to  the  Legis- 
lature from  year  to  year.  The  Commission  has  no  power  to  regulate 
freights  and  rates  at  which  passengers  are  to  be  carried,  nor  actively 
to  interfere  in  the  management,  but  simply  to  prevent  that  abuse 
of  railway  corporate  affairs  which  has  resulted,  on  the  one  hand,  in 
an  entire  forgetfulness  on  the  part  of  the  directors  that  they  have 
public  as  well  as  private  functions  to  perform,  and  on  the  other,  of 
the  duties  which  are  incumbent  upon  them  towards  the  stock- 
holders. 

The  bill  is  a  lengthy  one,  because  in  our  jealous  regard  for  the 
iuterests  with  which  we  were  dealing  we  did  not  desire  in  general 
terms  to  clothe  these  Commissioners  with  power,  but  carefully  to 
enumerate  every  investiture  of  authority  so  as  not  to  allow  them  to 
step  one  inch  beyond. 


9 


The  Commission  have  further  the  right  and  duty  to  prescribe 
a  uniform  system  of  keeping  railway  accounts,  so  as  effectually  to  stop 
comparatively  bankrupt  companies  from  imposing  upon  the  com- 
munity as  being  prosperous  concerns,  and  on  the  other  hand,  to 
prevent  by  a  false  system  of  book-keeping  organizations  having 
franchises  of  enormons  value,  from  keeping  down  the  dividends 
that  they  really  earn,  and  thus  hiding  from  the  public  eye  and  their 
stockholders  the  great  value  of  the  privileges  which  they  possess, 
and  the  vast  sums  they  earn,  and  this  Commission  therefore  is  to 
put  a  check  upon  the  organization  of  the  numerous  drains  to  carry 
off  into  the  private  purses  of  the  directors  the  surplus  earnings 
made  by  the  corporations,  of  the  latter  category,  with  which  they 
are  connected. 

When  we  take  into  consideration  that  our  railway  companies 
absorb  annually  nearly  one  hundred  millions  of  dollars  in  the  State  of 
New  York  alone  in  the  transportation  of  freight  and  passengers,  it  is 
mauifest  that  great  and  vast  public  duties  have  not  been  brought 
under  public  control,  and  that,  though  more  important  in  this  case 
than  in  our  banking  and  insurance  systems,  the  same  State  super- 
vision and  control  has  not  been  devised  for  it.  And  yet  it  is  a 
more  aggressive  and  more  powerful  interest,  and  carries  out 
larger  public  functions  than  are  performed  by  the  other  partly 
public  and  partly  private  businesses  which  have  been  subjected 
to  such  supervision.  At  the  time  of  the  organization  of  our 
State  Government,  under  the  constitution  of  1846,  Insurance  and 
Banking  interests  had  been  fully  developed,  and  the  dangers 
to  which  the  community  might  be  subjected  by  their  improper 
management  were  fully  understood.  The  railway  interest  at  that 
time  promised  such  fruitful  results  in  the  development  of  the  indus- 
trial and  commercial  interests  of  the  State,  and  the  danger  from  its 
existence  seemed  so  slight,  that  no  alarm  was  created  as  to  its  future 
influence  upon  the  State,  and  it  was  and  is  left  free  to  exercise  the 
right  of  eminent  domain,  and  to  consolidate  itself  into  the  vast,  col- 
lossal,  and  almost  overpowering  financial,  social  and  legislative 
monster  it  has  grown  to  be.  We  are  now,  however,  brought  face 
to  face  with  the  question  whether  it  is  not  wise  to  resist  the  growth 
of  this  great  imperium  in  imperio,  in  so  far  as  its  influence  from 
its  management  is  concerned,  and  to  bring  that  under  public  super- 
vision and  control.  We  certainly  did  forget,  in  our  efforts  to  pro- 
mote the  vast  advantages  to  be  derived  from  railways,  that  the 
highways  are  always  matter  of  public  concern,  and  belong  to  the 
public,  and  we  but  now  see  that  within  the  last  twenty  years  the 


10 


railway  has  become  the  highway  of  the  people,  and  that  the  ordi- 
nary road  or  turnpike  bears  the  same  relation  to  it,  that  the  gig 
does  to  the  locomotive  engine,  or  the  wheelbarrow  to  the  palace- 
car.  We  even  in  the  infancy  of  railway  enterprise  undertook  to 
regulate  that  which  was  supposed  to  be  the  main  part  of  its  busi- 
ness, to  wit,  the  passenger  traffic,  but  which  in  process  of  time  be- 
came its  least  important  part,  and  now  scarcely  represents  one-fourth 
of  the  income  of  railways  in  this  State. 

When  you  will  take  into  consideration  the  mildness  of  the 
measure  which  we  propose,  and  how  jealously  and  carefully  it 
guards  all  the  legitimate  interests  of  the  corporations  which  are  de- 
signed to  be  affected  by  it,  you  will  find  it  difficult  to  understand 
how  there  should  be  any  opposition  to  such  a  measure,  and  wonder 
especially  why  there  should  be  opposition  on  the  part  of  the  rail- 
way companies  themselves  to  what  we  now  propose  ;  and  if  they 
oppose  the  passage  of  this  bill,  unwisely  and  short-sightedly,  it  can- 
not but  be  concluded  that  opposition  to  the  slightest  investigation 
into  their  affairs  arises  from  the  fact  that  their  affairs  will  not  bear 
investigation.  Should  the  people  once  so  conclude,  they  will  insist 
upon  carrying  through  to  legal  enactment  a  more  stringent  meas- 
ure, with  reference  to  the  more  efficient  regulation  and  government 
of  our  new  public  highways.  So  that  this  creature  and  child  of  the 
State,  the  railway  corporation,  clothed  by  the  State  with  the  power 
which  is  the  badge  of  sovereignty  itself,  to  wit,  eminent  domain,  a 
power  of  confiscation,  a  power  it  now  asserts  as  against  municipal 
corporations  themselves,  and  denies  the  right  of  a  subordinate  part 
of  the  State  to  take  away  from  it  for  superior  public  purposes  the 
land  which  it  originally  acquired  for  a  quasi  public  purpose,  shall 
no  longer  conduct  as  against  the  State  government  itself  the  power 
of  government,  but  be  made  subservient  to  the  public  weal. 

Now,  the  railway,  this  child  of  the  State,  looks  with  jealousy 
upon  its  own  parent  attempting  to  regulate  its  conduct;  it  says  that 
it  will  take  care  of  itself,  but  it  stretches  out  its  arms,  as  we  know, 
in  this  State,  to  interfere  and  control  a  great  many  other  in- 
terests than  its  own.  It  attempts  even  to  regulate  the  govern- 
ment for  us,  and  no  government  can  exist  for  any  long  period  of 
time  and  provide  for  the  welfare  of  its  citizens  so  long  as  there  is  a 
power  within  it  more  powerful  than  itself. 

In  Spain,  the  cowl  rules  the  State.  The  Spanish  nation  did  not 
in  time  prevent  the  growth  of  that  monastic  and  priestly  power, 
which  gradually  absorbed  all  the  other  powers  of  the  State,  and  thus 
Spain  affords  a  particularly  striking  contrast  to  the  English  nation, 


11 


which,  beginning  with  the  Act  de  Religiosis  in  the  time  of  Henry  I., 
counteracted  the  absorption  of  the  land  of  England  by  the  Church, 
concluded  its  public  policy  in  this  particular  with  the  confiscation 
of  Church  property  under  Henry  VIII.,  and  thus  forever  prevented 
the  creation  of  an  antagonistic  power  to  the  public  weal — a  policy 
which  placed  Eugland  in  the  vanguard  of  progress  from  that  time 
forth. 

"When  dissolute  princes  ruled  France,  loose  women  were 
more  powerful  than  the  throne.  In  our  own  State,  the  table, 
around  which  are  seated  our  railway  magnates,  is  the  actual  place 
of  the  government  of  the  State,  instead  of  the  legislative  and  ex- 
ecutive departments. 

Those  who,  from  interested  or  sinister  motives,  see  fit  to  oppose 
the  law  we  desire  to  have  enacted,  pretend  to  believe  that  we  are 
opposed  to  the  railway  interest  itself.  Nothing  can  be  farther  from 
the  truth;  our  interests  are  identical  with  those  of  the  railways.  I 
represent,  in  speaking  here  upon  this  measure,  thirteen  hundred 
business  firms  of  the  State  of  New  York,  who  supply  at  least  two- 
thirds  of  the  shipping  and  forwarding  business  of  the  State,  and 
surely  a  class  of  people  so  largely  interested  in  the  permanent  wel- 
fare of  the  State  cannot  for  a  moment  be  charged  with  opposition 
to  the  railways.  What  they  are  opposed  to  is  malversation,  mis- 
management, and  disregard  of  public  interest  which  have  crept  into 
railway  affairs,  and  they  propose  this  mild  measure  of  reform  not 
because  they  believe  that  they  understand  these  questions  better 
than  those  whose  business  it  is  to  conduct  railway  enterprises,  but 
to  create  an  instrumentality  of  a  wise,  discriminating  and  expert 
Commission,  through  whose  aid  a  solution  may  be  found  for  the 
difficult  problem  of  reconciling  both  public  and  private  interests  in 
the  management  of  these  corporations.  What  we  propose  cannot 
with  propriety  be  now  opposed  on  the  ground  that  it  is  an  experi- 
ment. The  State  of  Massachusetts  has  had  for  seven  years  past  a 
Railway  Commission,  of  which  Charles  Francis  Adams,  Jr.,  is  at  the 
head,  and  it  has  done  excellent  service.  Its  reports  from  year  to 
year  to  the  Legislature  and  the  intelligent  people  of  that  State  not 
only  are  satisfactory  expositions  of  the  evils  and  their  remedy  of 
railway  legislation  and  management,  but  it  has  also  been  found  a 
useful  Arbitration  Committee  and  a  stay  to  hasty  and  ill-advised 
legislation,  and  the  people  of  that  State  seem  not  unwilling  to  ex- 
tend its  power,  and  the  Commission  this  year  feel  authorized 
to  ask  for  such  an  extension  in  the  very  report  which  I  hold  in 
my  hand.    In  this,  the  seventh  annual  report  of  the  Railway  Com- 


12 


mission  of  the  State  of  Massachusetts,  they  ask  of  their  Legislature 
that  which  is  already  embodied  in  this  bill  before  you:  the  power 
to  prescribe  a  uniform  system  of  railway  accounts  To  show  you 
how  necessary  such  a  system  has  become,  I  shall  quote  what  the 
Commission  say-',  in  the  report  to  which  I  have  alluded,  upon  this 
subject: 

"  The  railroad  returns  are,  and  must  continue  to  be,  essentially  unreliable,  if 
not  even  deceptive,  until  a  radical  reform  in  the  methods  of  railroad  book-keeping 
is  devised.  Upon  this  point  the  Commissioners  have  no  new  considerations  of  a 
general  nature  to  offer.  The  cause  of  the  difficulty  is  obvious.  It  dates  from  the 
very  origin  of  the  railroad  system,  when  it  was  not  appreciated  what  that  system, 
as  a  whole,  or  the  several  members  of  it  individually,  were  destined  to  become. 
Eailroads  were  then  regarded  as  purely  private  enterprises,  managed  by  cor- 
porate bodies,  in  the  doings  and  business  aflairs  of  which  the  holders  of  the  com- 
pany's stock  alone  were  interested.  They  were  supposed  to  be  more  analogous 
to  turnpike  corporations  than  to  anything  else,  and  enjoyed  much  the  same  ex- 
emption from  public  supervision,  nominal  returns  only  being  made  by  them. 
Gradually,  however,  the  public  character  of  the  functions  they  exercised  be- 
came understood,  until,  as  long  ago  as  the  year  1846,  only  eleven  years  after 
the  first  three  roads  were  opened  in  Massachusetts,  the  corporations  were  called 
upon  by  a  general  law  for  annual  statements  of  their  doings  and  condition,  which 
since  then  have  been  published  as  part  of  the  records  of  the  State."  (p.  25.) 

"  They  are,  however,  still  often  inaccurate,  and  at  times  even  deceptive.  In- 
deed, whenever  those  in  charge  of  a  corporation  have  any  object  to  gain  by  a 
concealment  of  the  true  condition  of  its  affairs,  the  returns  afford  an  excellent 
opportunity,  amounting  to  almost  an  invitation,  for  either  the  suppression  of  the 
true  or  the  suggestion  of  the  false.  They  do  so  in  a  very  obvious  way.  They 
are  collected  by  authority  of  law,  and  compiled  by  public  officials.  They  are 
prepared  under  oath,  and  upon  a  uniform  schedule  of  interrogatories,  the  an- 
swers to  which  are  carefully  tabulated.  Under  all  these  conditions,  the  returns 
go  out  to  the  public  with  a  species  of  endorsement  of  their  truthfulness  and  ac- 
curacy on  the  part  of  the  Commonwealth.  They  thus  enjoy  an  authority  which 
in  no  way  belongs  to  them.  In  the  popular  mind,  it  is  naturally  supposed  that, 
as  the  results  are  uniform,  the  methods  through  which  they  are  arrived  at  are 
likewise  uniform,  and  it  requires  very  considerable  familiarity  with  railroad  ac- 
counts to  see  that  this  is  not  the  case.  The  returns  of  each  road,  on  the  contrary, 
are  arrived  at  from  a  system  of  book-keeping  peculiar  to  itself,  through  the  ap- 
plication of  arbitrary  rules,  which  in  different  cases  may  or  may  not  be  the  same, 
and  which,  in  the  case  of  corporations  at  all  embarrassed  financially,  are  almost 
certain  to  be  exceptional.  Under  such  a  system,  it  is  no  way  necessary  to  have 
recourse  to  fraud  or  mis-statement,  in  order  to  give  to  a  company's  affairs  a  de- 
sired aspect,  whether  favorable  or  otherwise.  It  can  be  done  with  perfect  cer- 
tainty, and  yet  the  books  be  accurately  kept  and  the  results  truthfully  deduced 
from  them.  It  is  only  necessary  to  apply  to  the  real  facts  the  arbitrary  rules 
which  each  company  lays  down  for  its  own  guidance,  and  which  do  not  appear 
on  the  face  of  the  returns. "  (p.  26. ) 

"  The  degree  to  which  the  balance  representing  net  earnings  may  be  ap- 
parently increased  or  diminished  at  will  can  be  perfectly  illustrated  is  a  matter 
of  now  almost  daily  experience— the  replacing  of  iron  by  steel  rails.    Of  two  cor- 


13 


porations  engaged  in  doing  this,  one  is  embarrassed,  and  wishes  to  increase  its 
apparent  income;  the  other  is  pursuing  a  conservative  course,  and  is  improving 
the  value  of  its  property;  each  must  lay  down  some  rule  under  which  the  un- 
usual outlay  for  steel  in  place  of  iron  shall  be  entered  on  its  books.  The  embar- 
rassed corporation  so  manipulates  the  account  that  the  whole  outlay  is  ulti- 
mately charged  to  construction,  while  by  the  conservative  corporation  it  is  met 
at  once  out  of  the  net  earnings."  When  the  cost  of  the  steel  is  thus  disposed  of, 
the  old  iron  still  remains  among  the  assets  of  two  corporations,  piled  up  along 
the  track  awaiting  a  purchaser.  It  must  therefore  appear  in  their  returns  as 
property  on  hand.  One  corporation  charges  it  off  its  books  at  so  much  material 
on  hand  required  for  use  in  yards,  sidings,  etc. ;  while  the  other  will  estimate  it 
not  at  its  market  value,  but  at  its  original  cost,  on  the  ground  that  it  is  still  fit  for 
use.  Thus,  by  a  simple  and  perhaps  not  dishonest  manipulation  of  accounts,  in 
a  way  which  is  not  apparent  on  the  face  of  the  returns,  a  corporation  which  is 
doubling  the  value  of  its  property  may  prove  itself  unable  to  pay  a  dividend; 
while  another  corporation  on  the  high  road  to  insolvency  may  figure  out  heavy 
surplus."  (pp.  27-28.) 

"  A  similar  difference  of  system  among  the  several  corporations  is  made  ap- 
parent by  a  comparison  of  the  cost  at  which  their  rolling-stock  stands  on  their 
books.  The  variations  are  so  w  de  as  to  be  almost  ludicrous.  The  explanation 
is  again  found  in  the  fact  that  each  company  is  a  law  unto  itself.  In  one  return, 
a  number  of  newr  engines  or  cars  made  in  the  shops  of  the  company  during  each 
year  are  charged  as  part  of  the  expenses  of  operation,  on  the  ground  that  they 
roughly  represent  the  general  deterioration  of  the  rolling-stock.  In  another  case, 
it  will  on  examination  be  found  that  every  addition  to  rolling-stock  is  charged  to 
construction,  and  that  old  numbers  are  carried  on  the  books  long  after  that  which 
they  once  represented  has  been  condemned  for  deterioration.  The  present  cost 
of  a  new  first-class  8- wheel  locomotive,  weighing  thirty  tons,  is  $8,000;  that  of  a 
new  first-class  passenger  car,  complete,  is  $4,600,  while  a  box  freight  car  costs 
$700,  and  a  flat  or  platform  freight,  $575.  On  the  books  of  the  companies  it  will  be 
noticed  that  locomotives  vary  from  $2,507  to  $12,365;  passenger  cars,  from  $96  to 
$4,500;  and  freight  cars,  box  and  flat  (in  the  way  the  returns  are  made,  the  value 
of  these  cannot  be  separated),  from  $57  to  $868.  In  glancing  over  the  table,  the 
discrepancies  are  so  great  that  it  is  not  easy  to  believe  that  the  figures  in  any  one 
column  relate  to  property  of  the  same  description."  (p.  32.) 

Those  who  urge  against  the  adoption  of  our  scheme  the  expense 
to  which  it  will  subject  the  railways — about  thirty-five  or  forty 
thousand  dollars  a  year — forget  that  there  is  probably  not  one  of 
the  main  lines  which  pass  through  our  State  that  expends  less 
in  a  single  session  of  our  Legislature  for  the  prevention  of  strikes 
against  its  interests.  The  organization  of  such  a  commission  will 
prevent  hereafter  two  kinds  of  applications  for  legislative  inter- 
ference from  coming  year  after  year  to  the  Legislature.  Those 
devised  by  a  set  of  adventurers,  who  come  here  with  measures 
to  frighten  railway  corporations  to  buy  them  off,  and  such  as  are 
devised  by  the  railway  managers  themselves,  who  come  here  for 
the  extension  of  their  own  powers.    We  suppose  that,  hereafter, 


14 


by  common  consent,  legislation  for  these  subjects  will,  to  be  suc- 
cessful to  obtain  the  legislative  ear,  be  expected  to  originate  in 
that  department  of  the  State  government  having  the  question  of 
railways  in  charge,  and  the  Legislature  will  be  as  little  troubled 
with  questions  affecting  their  interests  as  they  now  are  with  the 
question  affecting  the  banking  and  insurance  departments  of  the 
State,  which  departments  have  worked  well,  have  given  safety, 
certainty  and  tranquility  to  those  interests  of  public  welfare — a 
peace  and  security  to  the  public  interests  which,  notwithstanding 
the  great  public  service  which  the  railroad  corporations  perform, 
the  people  of  the  State  are  far  from  experiencing  at  their  hands. 

It  is  for  you,  gentlemen,  to  determine  from  what  point  of  view 
you  choose  to  regard  the  measure  we  now  propose.  Let  me  assure 
you  that  it  is  not  a  felon  whom  you  can  with  impunity  turn  out  of 
doors,  but  a  creditor  who  stands  here  asking  his  due,  and  whose 
demands  you  must  meet  sooner  or  later  with  compound  interest 
however  long  you  may  delay  the  payment  of  the  debt,  and  it  is 
not  wise  to  delay  that  to  too  late  a  period.  Complications  may 
and  will  arise  that  will  make  the  solution  of  this  problem  more  and 
more  difficult  from  year  to  year.  The  solution  is  now  attempted 
quietly  and  dispassionately  by  the  mercantile  interests  of  this  com- 
munity, who  speak  to  you  through  us.  Let  the  grievances  which 
the  people  will  be  called  upon  to  suffer  at  the  hands  of  railroad 
companies  become  much  worse  than  they  are  now,  let  them  once 
become  the  shibboleths  of  party,  and  an  ignorant  multitude  frame 
party  platforms  about  this  matter,  and  the  work  will  then  be  taken 
up  by  different  hands  from  the  conservative  ones,  to  which  this 
question  is  now  confided — hands  which  are  regardful  of  the  pro- 
perty interests  they  are  called  upon  to  deal  with.  Let  it  slip  from 
them  and  probably  the  next  demand  will  be  the  immediate  co- 
partnership of  the  State  in  railways,  and  if  that  demand  should 
fall  again  upon  heedless  minds  the  people  of  this  State  may  insist 
upon  the  confiscation  of  railway  franchises  within  its  borders. 
I  therefore  address  you  in  the  same  spirit  as  I  would  address  a 
board  composed  of  railroad  presidents,  had  they  it  in  their  power 
to  pass  this  measure  ;  I  would  urge  them  in  their  own  interest  to 
let  this  bill  become  a  law. 


15 


Mr.  A.  B.  Miller,  of  the  New  York  Cheap  Transportation  Associa- 
tion, said  : 

Mr.  Chairman  'and  Gentlemen  of  the  Committee  : 

In  appearing  before  you  for  the  purpose  of  advocating  the  pas- 
sage of  the  bill  creating  a  Board  of  Railway  Commissioners  for  the 
State  of  New  York,  I  beg  to  direct  your  attention  to  the  depressed 
condition  of  the  business  of  the  city  of  New  York,  which  has  been 
brought  about,  to  a  great  extent,  by  unjust  discriminations  that 
have  been  made  against  her  and  in  favor  of  rival  cities  by  the  vari- 
ous trunk  lines  of  railway  extending  from  the  grain  producing  re- 
gions of  the  West  to  the  Atlantic  seaboard. 

As  an  illustration,  I  will  call  your  attention  to  two  recent  in- 
stances, viz.:  4th  class,  or  heavy  freight,  has  been  transported* 
within  a  few  months  past,  from  Boston,  Mass.,  to  Chicago,  and  other 
equi-distant  Western  points,  for  $'3  per  ton;  while  the  charge  for  the 
same  freight  from  the  city  of  New  York  to  the  same  places  was  just 
100  per  cent,  more — $B  per  ton,  and  this  with  less  distance  from 
New  York.  During  the  past  winter,  corn  and  other  grain  has  been 
transported  from  Chicago  and  other  Western  cities,  to  Baltimore,  at 
no  less  than  15c.  per  bushel  less  than  was  charged  for  its  delivery 
to  the  city  of  New  York. 

The  consequence  has  been  most  disastrous,  and  unless  reme- 
died, must  result  in  the  loss  of  our  commerce  and  the  decline  of 
our  hitherto  prosperous  city.  Already  some  of  our  most  prominent 
and  enterprising  importing  and  shipping  houses  have  been  com- 
pelled in  self-defense  to  establish  branches  at  Baltimore  and  Bos- 
ton for  the  purpose  of  availing  themselves  of  these  advantages. 
Therefore,  notwithstanding  the  depression  that  has  attended  the 
business  of  the  country  consequent  upon  what  is  termed  the  hard 
times,  Boston,  Philadelphia  and  Baltimore  have  not  suffered  rela- 
tively the  same  percentage  of  loss  as  New  York. 

It  is  well  known,  Mr.  Chairman,  that  our  State  has  become  the 
"  Empire  State  "  almost  entirely  through  the  nourishing  growth 
and  prosperity  that  has  resulted  from  the  commercial  success  of  the 
city  of  New  York,  and  which,  up  to  a  very  recent  period,  may  be 
attributed  to  the  connection  of  the  great  lakes  with  the  Hudson 
River,  and  Atlantic  Ocean  by  the  Erie  Canal  ;  but  the  more  mod- 
ern railroad  is  fast  supplanting  water  routes  in  the  commerce  of 
the  country,  and  unless  we  have  advantages  that  will  permit  the 
productions  of  the  country  to  be  placed  as  cheaply  in  New  York  as 


16 


in  other  seaboard  cities,  our  city  must  decline,  and  the  State  will 
speedily  follow  her  fallen  fortunes. 

I  believe  there  is  no  instance  recorded  in  history  where  a  city 
or  nation,  having  lost  her  commerce,  ever  regained  it.  The  city  of 
Bristol  was  at  one  time  the  principal  seaport  of  Great  Britain;  but 
with  her  rapidly  increasing  business,  greater  facilities,  such  as 
docks,  warehouses,  etc.,  were  required,  but  instead  of  furnishing 
them,  increased  exactions  were  imposed  upon  commerce,  until  they 
became  intolerable.  This  resulted  in  the  erection  of  the  splendid 
system  of  docks  and  warehouses  which  has  converted  Liverpool  into 
the  foremost  seaport  city  of  the  British  Empire,  while  Bristol, 
as  the  result  of  her  greed  and  indifference  to  the  wants  of  com- 
merce, has  almost  fallen  into  obscurity.  The  city  of  Salem,  Mass., 
is  a  somewhat  similar  instance  of  decay  in  our  own  country,  as  it  is 
but  a  few  years  since  she  posse  sed  almost  the  entire  East  India 
trade,  now  diverted  to  the  more  enterprising  cities  of  New  York  and 
Boston. 

From  these  lessons  we  should  be  taught  to  see  that  our  great 
State  and  city  are  not  impeded  in  their  marvelous  growth  and 
prosperity  by  any  neglect  of  the  Government,  or  of  her  citizens  to 
provide  all  needful  transportation,  and  such  other  facilities  as  will 
secure  their  commercial  supremacy.  As  a  meahs  to  this  end,  I 
firmly  believe  that  the  passage  of  the  Railway  Commissioner  Bill 
will  be  a  great  auxiliary  in  enabling  the  people  to  become  acquainted 
with  the  facts  relating  to  the  construction  and  management  of  our 
present  system  of  railways,  and  sujDply  such  data  and  suggestions  as 
will  tend  to  promote  the  best  interests  of  the  people  in  bringing 
about  uniform  and  cheap  railway  transportation .  Therefore,  I  hope 
that  your  Honorable  Committee  wTill  favorably  report  the  bill  now 
before  you. 

Col.  F.  A.  Conkling,  being  called  upon,  addressed  the  Committee  as 
follows  : 

Having  been  a  witness  of  the  patience  and  courtesy  with  which 
you,  Mr.  Chairman,  and  your  associates,  have,  from  an  early  hour 
this  morning,  listened  first  to  one  and  then  to  another  set  of  peti- 
tioners, I  shall  confine  my  remarks  to  as  brief  a  space  as  possible. 

We  have  come  here  as  the  representatives  of  the  commerce,  in- 
terior and  exterior,  of  the  city  of  New  York,  in  the  full  confidence 
that  our  interests  will  receive  at  your  hands  the  same  friendly  con- 
sideration which  they  have  always  received  in  the  past.    When  we 


17 


recollect  that  the  people  of  this  State,  more  than  half  a  century 
ago,  constructed  the  Erie  Canal  for  the  purpose  of  opening  an  out- 
let for  the  products  of  the  West  to  the  markets  of  the  world,  thus 
bringing  the  cheap  an  1  fertile  lands  of  that  great  region  into  direct 
competition  with  their  own  wheat  and  corn  producing  farms;  when 
we  recall  the  fact  that  New  York  was  then  only  a  city  of  the  second 
rank,  and  that,  as  the  fruit  of  this  generous  policy,  she  sprang,  as 
with  a  single  bound,  to  her  present  commercial  pre-eminence,  it 
would  ill  become  us  to  doubt  that  our  petition  will  receive  from 
the  committee  a  just,  and  even  a  favorable  consideration. 

We  come  here  not  to  make  war  upon  the  railroads,  but  to  submit 
our  views  to  an  impartial  tribunal,  which  we  feel  confident  will  dis- 
pense even-handed  justice  botli  to  the  citizen  and  to  the  common 
carrier.  It  is  our  earnest  wish  to  meet  the  great  corporations  which 
control  the  carrying  trade  of  the  State,  or  their  representatives,  in 
an  entirely  conciliatory  spirit.  We  stand  ready  to  modify  the  bill 
now  in  your  hands,  in  any  way  which  will  be  acceptable  to  the  com- 
panies, provided  only  its  vital  essence  is  preserved.  But  one  thing 
I  am  sure  is  needed  to  bring  us  together  in  perfect  harmony,  and 
that  is  the  concession,  on  the  part  of  the  companies,  that  their  ac- 
counts are  not,  and  ought  no  longer  to  be  treated  as,  a  matter  of 
private  concernment,  demanding  entire  secrecy,  but  that  a  uniform 
system  of  accounts  should  be  adopted,  to  the  end  tnat  a  reasonable 
degree  of  publicity  should  be  given  to  their  operations. 

For  myself,  I  claim  to  be  a  railroad  man.  In  years  gone  by, 
when  I  had  the  honor  to  serve  as  a  member  of  the  Legislature,  it 
was  even  made  a  matter  of  reproach  that  I  was  a  railroad  and  not 
a  canal  man.  I  may  say  in  behalf  of  rny  colleagues,  as  well  as  my- 
self, that  we  are  all  railroad  men  Every  intelligent  man  knows 
that  the  railroad  is  at  once  the  expression  and  the  instrument  of 
the  modern  civilization.  A  very  brief  glance  at  its  history  will 
suffice  to  show  that  such  is,  and  in  all  coming  time .  must  be,  its 
office.  Recognizing  its  overmastering  importance  and  power,  it 
should  be  the  aim  of  every  patriotic  man  to  give  it  the  greatest  pos- 
sible amount  of  development  and  utility,  which  I  am  satisfied  has 
never  yet  been  done  either  at  home  or  abroad. 

The  first  train  of  railway  cars,  as  we  now  understand  that  term 
— i.  e.,  a  train  of  wagons  drawn  by  a  locomotive  engine  over  an 
iron  track — was  run  over  the  Liverpool  and  Manchester  Railway  on 
the  6th  of  October,  1829,  or,  in  other  words,  but  little  more  than 
forty-six  years  ago.  Yet  on  the  1st  of  January  last  there  were  in 
the  world  16G,000  miles  of  railway,  of  which  74,500  were  in  the 


United  States,  16,175  in  Great  Britain,  13,25a  in  France,  13,250  in 
Germany,  12,050  in  Russia,  and  so  on,,  down  to  40  miles  in  Japanc. 
Now  contrast  these  aggregates  with  those  of  the  canals.  With  the 
aid  of  an  eminent  statistician,  I  have  recently  ascertained  the  whole 
number  of  miles  of  canal  in  the  world  to  be  but  24,500.  This  aggre- 
gate includes  the  slack-water  navigation  of  the  great  rivers  of  the 
Orient,  such  as  the  Yangtse  Kiang  and  Hoang  Ho,  in  China,  and 
that  of  the  Ganges,  in  India.  It  is  the  accumulation  of  all  the  ages? 
for  the  canal  has  existed  from  the  dawn  of  history.  It  has  been  the 
instrument  of  trade  and  travel  among  semi-barbarous  as  well  as 
among  civilized  races  of  men. 

Why,  then,  has  the  growth  of  the  railroad  so  far  outstript 
that  of  the  canal?  In  the  first  place,  the  railroad  enables  us  to 
substitute  steam  for  animal  power.  Besides,  while  the  canal  is  ren- 
dered unavailable  in  our  latitude  during  one  half  of  the  year,  the 
railway  performs  its  functions1  unceasingly,  regardless  of  the  frosts 
of  winter  or  the  droughts  of  summer.  But  in  addition  to  econonry 
of  transportation  and  to  unceasing  regularity  in  its  operations,, 
the  railway  insures  a  degree  of  celerity  of  movement  which  is 
wholly  impossible  of  attainment  on  the  canaL 

The  cost  of  transporting  Indian  corn  over  an  ordinary  highway  is 
equal  to  20  cents  per  ton  per  mile.  At  that  rate,  it  will  bear  trans- 
portation for  a  distance  of  only  125  miles  to  market  where  its  value 
is  equal  to  75  cents  per  bushel.  With  such  highways  only  it  would 
have  no  commercial  value  outside  a  circle  drawn  upon  a  radius  of 
125  miles.  Upon  a  railroad  properly  constructed  and  equipped,  the 
cost  of  carriage  is  but  |c.  per  ton  per  mile.  With  such  a  work,,, 
consequently,  the  circle  within  which  corn,  at  the  price  named,  will 
have  a  marketable  value,  will  be  drawn  upon  a  radius  of  3,200  miles, 
or  more  than  twenty-five  times  as  great  as  on  a  common  country 
road. 

A  single  transaction  out  of  hundreds,  not  to  say  thousands,  will 
illustrate  our  grievances  as  respects  the  management  of  our  great 
lines  of  railway. 

A  dealer  in  the  West  recently  ordered  from  a  broker  in  the 
city  of  New  York  a  lot  of  soda  ash.  The  price  of  the  article  in  our 
market  was  2c.  per  lb.,  gold,  and  the  freight  charged  to  its  place  of 
destination  was  41c.  per  cwt.  Upon  writing  to  his  correspondent 
in  Boston,  he  ascertained  that  he  could  fill  the  order  there  for 
2.1-lGc.  per  lb.,  gold,  making  a  difference  of  cost  in  favor  of  New 
York  of  6Jc.  per  cwt,,  but  he  also  learned  that  the  freight,  and  that, 
too,  over  the  New  York  Central  Railroad,  was  but  21c.  per  cwt.,  a 


19 


♦difference,  of  course,  of  20c.  per  cwt.  in  the  cost  of  transporta- 
tion, and  a  net  difference  of  ISJc.  in  favor  of  Boston.  Of  course 
the  purchase  was  made  there,  although  the  price  of  the  article  was 
less  here.  It  was  made  there  to  the  prejudice  of  the  steamers  com- 
ing to  New  York,  to  the  prejudice  of  the  New  York  merchant, 
with  hie  clerks  and  draymen,  of  the  owners  of  real  estate,  etc.,  etc. 

Now,  what  we  have  come  here  to  contend  for  is,  that  the  rail- 
road system  of  the  State  may  in  the  future  be  so  managed  that  the 
<jity  of  New  York  will  not  only  be  placed  upon  a  footing  of  equality 
with  other  cities  on  the  Atlantic  seaboard,  but  that  it  shall  derive 
the  greatest  possible  amount  of  benefit  from  it. 

We  know  that  nature  has  designed  the  city  of  New  York  to  be 
not  only  the  outpost  and  portal  of  the  New  World,  but  likewise  the 
■centre  and  focus  of  the  capital  and  commerce  of  this  whole  hemis- 
phere. We  believe  that  the  city  of  New  York,  if  we  are  only  true  to 
our  high  destiny,  will,  within  ihe  lifetime  of  the  child  born  to-day, 
contain,  with  its  suburbs,  a  population  of  not  less  than  1$, 000,000 
souls.  When  the  population  of  the  Mississippi  Valley  shall  have 
increased  to  50,000,000,  which  it  is  not  too  much  to  say  it  will  do 
within  the  period  indicated,  then  its  trade  will  become  the  greatest 
•commercial  prize  ever  wrestled  for — a  prize  -compared  with  which 
the  far-famed  trade  of  East  Indies  will  sink  into  insignificance. 

Whether  or  not  the  city  and  State  of  New  York  maintain  their 
proper  relations  to  this  great  commerce  of  the  early  future  depends 
very  largely  upon  the  conduct  of  the  great  railways  within  our 
borders. 

Mr.  Chauncey  Depew,  representing  the  New  York  Central  and  Hudson 
River  Railroad  Company,  then  addressed  the  Committee  in  oppo- 
sition to  the  bill 

He  could  see  no  use  for  any  such  Commission.  It  was  a  singu- 
lar fact,  that  the  human  mind  was  so  constituted,  that  men  thought 
they  could  manage  a  business  which  they  knew  nothing  about  a 
great  deal  better  than  the  business  they  knew  all  about.  These 
Railroad  Commissions  in  other  States,  so  far  as  practical  railroading 
was  concerned,  amounted  to  nothing.  They  were  very  good  on 
theories  and  statistics,  and  that  was  all  it  amounted  to.  If  they 
could  get  a  Commission  that  could  control  and  restrict  all  the  rail- 
roads in  the  country,  there  would  be  more  sense  in  it ;  but  this  pro- 
posed Commission  could  only  act  in  this  State,  whereas  the  rival 
roads  which  determined  the  action  of  the  New  York  roads  were  out 


20 


of  the  State  and  would  be  out  of  their  jurisdiction.  He  explained 
the  reasons  why  freight  was  a  few  weeks  ago  carried  cheaper  from 
Boston  than  New  York,  showing  it  was  the  rivalry  of  the  Grand 
Trunk,  a  bankrupt  concern,  run  "wiid,"  and  not  in  the  interest  of 
its  owners.  He  referred  to  the  recent  controversy  between  the  mer- 
chants of  New  York  and  Mr.  Vanderbilt,  growing  out  of  the  wide 
discriminations  in  tariffs  against  New  York  and  in  favor  of  com- 
peting cities,  and  declared  that  a  Commission  such  as  was  proposed 
would  have  been  powerless  under  the  circumstances  to  accomplish 
any  good.  He  detailed  other  contingencies  in  freight  rates  which 
were  attendant  upon  railroading,  in  all  of  which  he  said  a  Com- 
mission would  be  useless. 

Mr.  T.  F.  Lees,  of  the  New  York  Cheap  Transjyortation  Association, 
replied  to  the  foregoing  as  follows: 

Mr.  Chairman  and  Gentlemen: 

It  was  not  my  intention  to  have  added  anything  to  the  exceed- 
ingly comprehensive  and  complete  arguments  of  those  who  have 
preceded  me,  in  behalf  of  the  bill  under  consideration,  but  the  gen- 
tleman who  has  just  spoken  in  opposition,  while  he  has  not,  in  my 
opinion,  presented  any  argument  whatever  upon  the  questions  in- 
volved, has  made  statements  which  call  for  some  response.  I  am 
willing  to  accept  the  proposition  that  men,  as  a  general  thing  un- 
derstand their  own  business  best,  and  will  add  that  where  their  in- 
terest lies,  and  in  proportion  to  their  interest,  will  their  best  judg- 
ment be  brought  to  bear. 

A  few  men,  or  even  one  man,  may  own  or  control  a  railroad, 
but  of  necessity  great  authority  and  powers  are  delegated  to  nu- 
merous officials,  who  govern  the  details  of  operation,  who,  as  a  rule, 
have  not  a  dollar  invested  in  the  road,  unless  an  occasional  '  turn  " 
in  Wall  street  may  be  considered  such  an  investment,  and  whose 
only  real  interest  is  in  the  collection  of  their  salaries.  These 
officials,  together  with  those  who  have  placed  them  in  position, 
blindly  persist  in  believing  that  they  are  conducting  a  "  private 
business,"  and  will  only  reason  from  the  standpoint  that  they  are 
operating  icith  the  public,  instead  of  for  the  public. 

But,  sir,  the  transportation  which  they  thus  govern  and  direct 
is  a  most  practical  and  vital  element  that  enters  into  the  calcula- 
tions of  every  merchant  in  this  State.  It  daily  and  hourly  holds 
close  relations  with  the  thousands  of  millions  invested  by  the  mer- 
chants, manufacturers,  and  real  estate  holders,  and  it  is  therefore 


21 


not  only  proper  that  they  should  study  and  seek  to  understand  the 
great  question  upon  which  their  prosperity  largely  depends,  but  it 
is  their  imperative  duty. 

If  the  proposed  Commission  does  nothing  more  than  enlighten 
the  people,  it  will  perform  a  valuable  service.  Year  after  year,  for 
many  years,  up  to  three  years  ago,  the  estimated  actual  cost  of 
transportation  by  rail  was  about  lc.  per  ton  per  mile.  Daring 
the  past  three  years,  events  have  forced  the  public  mind  to  an 
energetic  and  intelligent  consideration  of  the  question;  the 
estimate  has  been  gradually  modified,  until  now  it  is  only  fc.  per 
ton  per  mile,  and  some  good  authorities  place  it  even  lower.  It 
appears  that  the  people  have  been  studying  to  meet  the  progress  of 
the  times,  while  the  railway  managers  were  disposed  to  run  along 
comfortably  in  the  old  groove.  Let  us  look  at  some  facts  in  prac- 
tical railroading,  and  see  whether  or  not  we  can  discern  a  sphere  of 
usefulness  for  Railway  Commissioners. 

The  past  year  will  ever  be  remembered  as  a  year  of  unusual 
commercial  depression.  The  unsettled  condition  of  trade,  and  of  the 
curreucy,  together  with  a  lower  tariff  basis  than  ivas  ever  before  known, 
made  it  a  year  as  unfavorable  for  railroading  as  for  other  interests. 
The  Pennsylvania  Railroad  Company's  report  for  that  year  shows 
out  of  gross  earnings  of  $58,000,000,  net  earnings  of  $21,500,000, 
over  and  above  the  gross  expenses,  including  rentals,  interest  and 
dividends,  and  the  Company,  for  the  first  time  in  its  history  of 
twenty-nine  years,  is  without  any  floating  debt  whatever. 

This  result  comes  of  retrenchment,  made  in  anticipation  of 
hard  times,  and  conveys  an  idea  of  the  variation  to  which  railway 
estimates  are  susceptible. 

Mr.  Adams,  of  the  Massachusetts  Board  of  Railway  Commis- 
sioners, in  his  report  for  1874,  says: 

"  Of  the  seven  Boston  roads  between  which  a  comparison  may 
fairly  be  instituted,  it  will  be  found  that  the  cost  per  mile  owned 
varies  87  per  cent.  ;  their  investments  per  mile  owned  varies  182 
per  cent.;  while  the  cost  of  running  trains  varies  60  per  cent." 

Here  we  see  a  surprising  variation  in  the  cost  of  constructing 
and  operating  a  "  business"  by  those  who  "  know  all  about  it." 

The  explanation,  Mr.  Adams  says,  is  found  in  the  fact  that 
the  several  corporations  adopt  their  system  of  book-keeping  to 
meet  their  financial  necessities.  THiere  their  annual  net  receipts 
are  in  excess  of  the  amount  necessary  to  pay  dividends,  new 
equipments  and  construction  are  charged  to  operating  expenses, 
and  thus  the  community  is,  through  the  medium  of  surplus  earn- 


22 


ings,  itself  paying  in  the  required  capital.  Where  they  with  diffi- 
culty earn  enough  to  declare  dividends,  all  doubtful  items  are 
charged  to  account  of  construction,  and  are  capitalized  in  the  form 
of  new  stock  or  debt.  It  seems  to  me  that  such  revelations  as  these 
should  remove  all  doubt  as  to  the  usefulness  of  Commissioners. 

The  gentleman  who  preceded  me  (Mr.  Depew)  has  set  up  the 
conduct  of  the  Grand  Trunk  road  of  Canada  as  an  apology  for  the 
discriminations  made  by  the  New  York  Central  road  in  favor  of 
Boston  and  against  New  York.  In  reply,  I  will  simply  ask  how  it 
happened  that  the  discrimination  to  Cincinnati,  Louisville  and 
points  beyond,  wholly  inaccessible  by  the  Grand  Trunk  road  and 
its  connections,  were  just  as  great  as  they  were  to  competing 
points  ? 

It  is  true,  as  the  gentleman  says,  the  Grand  Trunk  Road  is 
financially  unsound  ;  but  it  is  well  known  that  there  are  sub-cor- 
porations doing  the  business  of  that  road,  controlled  by  a  few  men 
who  hold  a  majority  of  the  stock  of  the  road  proper,  and  who  are 
enriching  themselves  while  they  impoverish  the  great  majority  of 
stockholders,  who  hold  a  minority  of  the  stock  only. 

There  is  at  present  no  law  to  prevent  the  same  practice  in  this 
State,  although  public  opinion  has  so  far  partially  held  it  in  re- 
straint. 

The  gentleman  (Mr.  Depew),  in  referring  to  the  recent  con- 
troversy between  the  merchants  of  New  York  and  Mr.  Vanderbilt, 
says  that  in  such  instances  and  in  all  instances  of  tariff  complica- 
tions, a  Commission  would  be  useless.  Now  then,  it  happens 
that  during  that  controversy  referred  to,  Mr.  Vanderbilt  expressed 
a  willingness  to  refer  the  question  to  Mr.  Adams,  of  the  Massa- 
chusetts Commission,  and  we  are  therefore  forced  to  believe  one 
of  two  things:  either  Mr.  Vanderbilt  was  trifling  with  the  public 
in  suggesting  such  a  reference,  or,  Mr.  Depew,  in  declaring  that 
a  Railway  Commission  would  be  useless,  has  not  stated  the 
views  of  those  he  represents.  But  in  point  of  fact,  it  is  not 
proposed  that  the  Commissioners  under  this  act  shall  exercise 
powers  in  such  contingencies  as  have  been  detailed.  It  is  not  pro- 
posed that  a  Board  of  Commissioners  shall  meddle  with  the  rates 
of  freights  at  all,  and  I  can  only  regard  the  introduction  of  the 
question  here  as  foreign  to  the  real  issue.  The  principle  which 
really  underlies  this  bill  is  honest  construction,  honest  equipment, 
honest  management,  and  the  rates  will  take  care  of  themselves. 

Mr.  Sterne. — Mr.  Depew  certainly  seems  too  much  to 
rely  upon  both  our  forgetfulness  of  the  past,  and  our  want  of 


23 

knowledge  of  what  is  going  on  around  us.  He  asks,  what  are  the 
grievances  of  railway  management  of  which  the  people  have  a 
right  to  complain?  The  history  of  the  Erie  Railroad,  under 
the  control  of  Fisk  and  Gould,  is  not  so  remote  a  one  that  we  do 
not  well  remember  the  lesson  which  it  teaches.  We  are  not  un- 
mindful of  the  many  stories  which  are  now  current  tending  to 
show  that  certain  railways  are  not  on  the  verge  of  bankruptcy  or 
ruin  simply  because  their  property  is  not  wasted  with  the  same 
rapidity,  and  because  the  franchises  are  of  enormously  greater 
value,  and  the  local  traffic  is  so  profitable  as  almost  to  defy  any 
system  of  mismanagement. 

Mr.  Depew  has  referred  to  one  tendency  of  the  human  mind, 
which  I  think  deserves  an  answer.  He  says  :  That  it  is  one  of  the 
infirmities  of  the  intellect  that  we  all  of  us  think  that  we  can  man. 
age  the  affairs  of  others  better  than  they  can  whose  business  of  life 
is  to  attend  to  it  ;  in  other  words,  that  we  imagine  that  we  can 
arrange  the  affairs  of  railways  better  than  the  railway  managers 
can  themselves.  The  simple  answer  would  be  :  We  do  not  for  a 
moment  arrogate  to  ourselves,  in  addition  to  such  faculties  as  may 
be  necessary  for  our  special  avocations,  the  possession  of  the  facul- 
ties necessary  for  successful  railway  management;  we  cannot  man- 
age them  at  all.  We  want  to  organize  a  board  of  railway  com- 
missioners composed  of  experts  who  themselves  shall  not  even 
have  the  power  to  undertake  their  management,  but  which  shall 
sit  as  a  permanent  body  to  discover  for  us  whether  or  not  they  are 
well  managed,  and  if  not  well  managed,  show  us  the  defects  in  their 
management,  and  to  suggest  the  remedy.  That  they  shall  make  this 
problem  their  life  study,  and  critically  consider  the  development  of 
the  beneficial  elements  of  this  great  social  machine  and  repress  its 
socially  antagonistic  and  dangerous  elements.  But  there  is  one 
infirmity  of  the  human  mind  certainly  more  universal  than  the  one 
to  which  Mr.  Depew  has  referred,  and  which  powerfully  affects  the 
minds  of  railway  managers  ;  that  is,  the  tendency  to  exaggerate 
the  important  functions  which  they  perform  in  the  social  economy, 
and  the  tendency  they  exhibit  to  claim  to  themselves  the  credit  due 
to  the  natural  agents  which  they  subject  to  their  executive  powers. 
And  hence  it  is  that  this  arrogant  power  scouts  the  idea  of  the 
scrutiny  of  government  in  its  direction.  And  our  railway  mana- 
gers, a  set  of  selfish  but  energetic  business  men,  claim  at  our 
hands  the  credit  due  to  the  inventors  of  the  great  and  useful  inven- 
tions which  they  have  made  available  for  the  uses  of  mankind.  We 
must  not  forget  that  it  is  the  steam  engine,  not  Mr.  Vanderbilt  and 


24 


his  kind,  which  in  this  country  has  so  materially  aided  the  progress 
of  civilization. 

Mr.  H.  Farrtngton  followed  in  support  of  the  bill,  reciting  in- 
stances where  supervision  by  the  State  or  General  Government  over 
banks  and  insurance  companies  has  resulted  in  protecting  the  pub- 
lic and  sound  institutions  against  weak  and  irresponsible  corpora- 
tions. He  did  not  consider  that  the  reasons  assigned  by  the  gentle- 
man (Mr.  Depew)  who  opposed  the  bill,  in  explanation  of  tlie  dis- 
crimination in  favor  of  Boston,  were  satisfactory,  or  could  in  any 
way  be  made  to  account  for  the  superior  advantages  enjoyed  by 
Philadelphia  and  Baltimore. 


OBJECTS. 


The  New  York  Cheap  Transportation  Associa- 
tion is  established  to  obtain,  preserve  and  circulate 
valuable  and  useful  information  relating  to  transporta- 
tion ;  to  encourage  the  improvement  and  increase  the 
capacity  of  our  terminal  facilities  for  the  handling  and 
storage  of  produce  and  merchandise  ;  to  facilitate  the 
adjustment  of  differences,  controversies  and  misunder- 
standings between  its  members  and  transportation  com- 
panies ;  to  advocate  the  construction  of  new  avenues  for 
transportation  and  the  improvement  of  those  now  exist- 
ing; to  devise,  submit  and  advocate  plans  of  legislation, 
by  which  the  defects  and  abuses  of  the  present  system 
may  be  remedied,  and  to  advocate  such  other  princi- 
ples and  projects  in  connection  with  the  subject  of  trans- 
portation as  will  tend  to  advance  the  commercial  pros- 
perity of  our  city  and  state. 


